Employee litigation is steeper in some U.S. states

Employee litigation can take a toll on a business both financially and reputation-wise. Enterprises that have undergone employee practice cases can be heavily docked in the consumers’ eyes for their treatment of their workers. And businesses in five particular areas of the U.S. need to watch out for employee litigation more than all other states, according to research from specialist insurer Hiscox.

California, Illinois, Alabama, Mississippi, and the District of Columbia are the top five riskiest regions for employee lawsuits in the U.S., says the data. The study found that U.S. businesses with at least 10 employees have a 12.5 percent change of experiencing a lawsuit of employment liability. The Insurance Journal details the statistics: California clocks in at 42 percent higher chance of businesses being sued by employees, District of Columbia at 32 percent, Illinois at 26 percent, Alabama and 25 percent, and Mississippi at 19 percent.

The Journal quotes Bert Spunberg, senior vice president and practice leader for Executive Risk at Hiscox on how evaluating state risk for employee litigation is more tricky than it is evaluating it at a federal level: “Federal level information on employee charges is generally available, but state specific information is more difficult to aggregate. Understanding employee litigation risk at a state level is a crucial step for an organization to establish the processes and protections to effectively manage their risk in this changing legal environment.”

Part of the increased risk for businesses that become embroiled in employee litigation at state levels is the absence of damage caps on fines imposed on companies. A cap of $300,000 exists at a federal level for damages, whereas states do not enforce caps. Therefore, companies charged with harassment or discrimination face possibly extraordinarily high fines.

On a national level, McDonald’s Corp. has been involved in a series of employee lawsuits alleging that the company underpaid its U.S. staff — prompting the company to open an investigation into its own practices. 27 plaintiffs have filed seven different lawsuits against the company, writes InsideCounsel’s Zach Warren, all of which seek class action status.